Military aid: US to make $337 million payment to Pakistan under CSF

For the current fiscal year, Pakistan has budgeted $1.5 billion on account of disbursements

ISLAMABAD:

Even as civilian aid to Pakistan continues to dry up, military assistance from the United States has been increasing in recent months after the military launched Operation Zarb-e-Azb. Washington is expected to make a $337 million payment to Islamabad under the Coalition Support Fund in the next few days.

The Obama Administration has notified the United States Congress of its intention to release the CSF tranche and, after a mandatory 15-day notice period ends this weekend, the money will be released to Pakistan, said a Finance Ministry official familiar with the matter.

Pakistan was originally expecting that Washington would release the amount before June 30 and had adjusted the federal budget to reflect the expected Rs204 billion or $2 billion for fiscal year 2015. The initially budgeted CSF receipts were Rs140 billion ($1.4 billion). The government had hoped that the higher CSF disbursements would help it attain the budget deficit target of 4.9% of the total size of the economy, which it promised the International Monetary Fund it would aim to achieve.

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Although the delay in the release of the $337 million dashed the government’s hopes for a narrow budget deficit, fiscal 2015’s total disbursements were still higher relative to recent years. CSF disbursements still amounted to roughly $1.7 billion in fiscal 2015, said the Finance Ministry official, far higher than the $675 million released by Washington in fiscal 2014.

A key reason for increase in disbursements is Operation Zarb-e-Azb, as the military offensive against the Taliban in North Waziristan and other tribal areas is treated as part of larger global campaign against terrorism.

The CSF constitutes compensation by the United States for defence and logistics spending undertaken by Pakistan as part of the US war against terrorism. Pakistan has received close to $13 billion in CSF reimbursements since 2001. For the current fiscal year, Pakistan has budgeted $1.5 billion or Rs154 billion on account of CSF disbursements.

The CSF transfers were originally supposed to dry up with the withdrawal of US forces from Afghanistan. After the 2011 Nato attack on Pakistani defence outposts in Salala, which resulted in the deaths of 24 Pakistani soldiers, both the sides rewrote the rules of engagements.

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The US had agreed to keep reimbursing the cost of fighting the war under a certain formula as long as Pakistan continues its support for the US-led war in Afghanistan.

Besides the CSF reimbursements, the US also provides assistance to replace obsolete military equipment under another counter terrorism capability fund, which is administered by Pentagon.

Yet even as military assistance is picking up, civilian assistance that is channeled through the government is coming to zero. According to the Finance Ministry’s budgetary books presented to the National Assembly last month, the country received only Rs5.2 billion or $50 million in direct civilian assistance in fiscal 2015 under the Kerry Lugar Act. The US had promised to give $7.5 billion in aid to Pakistan under the Kerry Lugar Act from 2010 to 2015 at $1.5 billion per annum.

However, the actual disbursements were far less than the promised under the Act. For the new fiscal year, the government expects nothing under the Kerry Lugar Act. The US is disbursing nearly all of its civilian assistance through international aid organisations but the government cannot track this spending, said an Economic Affairs Division official.

Published in The Express Tribune, July 24^th, 2015.